Six Face Federal Wire Fraud Charges in an Alleged Real Estate Flipping Scheme That Cost Victims More Than $4 Million

The Federal Bureau of Investigation (FBI) on April 24, 2012 released the following:

“SANTA ANA, CA— Federal prosecutors have charged six people—including women from Orange County and Tennessee who were arrested this week—in relation to a multi-million-dollar real estate flipping scheme in which investors were promised titles to homes that could be easily resold but in fact did not have “clean” titles, were uninhabitable, or were simply worthless.

According to an indictment returned by a federal grand jury on April 18, the six defendants participated in a real estate scheme in which they sold victims Real Estate Owned—REO, or bank owned—properties for as much as $45,000. Even though the defendants had paid less than $10,000 per property, they told buyers that the properties were valuable and could be resold—or flipped—for a profit within a year.

During a scheme that ran from mid-2009 through mid-2010, victims were promised that the properties came with clean titles, property management services, and guaranteed rentals for the first three months, according to the indictment. Furthermore, the defendants allegedly claimed they had an “exit strategy” in which buyers could choose to sell the properties back to them for $60,000.

In some cases, victims did not receive the properties because they simply did not exist. In other cases, the properties were condemned or other issues with the titles meant victims were not able to take control of the properties. Of those victims who did receive titles, some found that the titles were encumbered by tax liens, fines, or building code violations. Furthermore, the indictment alleges that investor funds were immediately disbursed upon receipt, rather than being held in escrow.

The indictment alleges that there are more than three dozen victims who suffered losses of at least $4.2 million.

The defendants solicited investors to purchase properties at seminars held in Irvine and Costa Mesa; Orlando, Florida; Dallas, Texas; and in “webinars” conducted on the Internet.

This six defendants named in the indictment are:

Sylvia Melkonian, 48, of Laguna Beach, who was arrested yesterday morning by special agents with the FBI;

Sheridan Snyder, 65, of Turtletown, Tennessee, who was also arrested yesterday by the FBI;

Andrew Wardein, 38, of Irvine, who surrendered to authorities on April 20 and was released on a $25,000 bond after a judge scheduled a trial in the case for June 12;

Craig Shults, 41, of Huntington Beach, who has agreed to appear for an arraignment in federal court tomorrow afternoon;

Paul LiCausi, 47, of Fort Pierce, Florida, who is expect to appear in court in Santa Ana on April 30; and

Joseph Haymore, 31, of Port St. Lucie, Florida, who is also expected to appear in court in Santa Ana on April 30.

After being arrested yesterday, Melkonian was arraigned in federal court in Santa Ana, where she pleaded not guilty and was released on a $20,000 bond. Snyder appeared yesterday in United States District Court in Tennessee and was released on a $30,000 bond with instructions to appear in federal court in Santa Ana on May 14 for an arraignment.

All of the defendants named in the indictment are named in at least five counts of wire fraud. Therefore, if they are convicted, each defendant would face statutory maximum sentences of at least 100 years in federal prison.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.

This case was investigated by the Federal Bureau of Investigation and investigators from the California Department of Justice, Office of the Attorney General. The case is being prosecuted by Assistant United States Attorney Greg Staples and Special Assistant United States Attorney Patricia Fusco of the California Attorney General’s Office (619-645-3035).”

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.